ANNUITY

Ordinary Annuity Annuity due

R R R R R R R R R R R

The amount

Sn= Rn+ n / 2 × R × r (t1+ tn)

Sn= Rn+ n / 2 × R × r × t (n-1)  Ordinary annuity

Sn= Rn+ n / 2 × R × r × t (n+1)  annuity due

The Present value

An= Rn- n / 2 × R × d (t1+ tn)  Present value

A person wants to put L.E. 600 quarterly in a savings account for a period of 5 years
using simple interest of 10% annually. Find:-
 The amount at last annuity time
 The Present value at the beginning of the period
If the annuity (a) Ordinary (b) Due
.m 60
Sn= Rn+ n / 2 × R × r × t (n-1)  Ordinary annuity
3 3
Sn= 600 × 20 + 20 / 2 × 600 × .1 × 3/12 (20-1)
= 12000 + 6000 × .1 × 1/4 × 19
= 12000 + 2850 = 14850

Sn= Rn+ n / 2 × R × r × t (n+1)  annuity due

3 3

Sn= 600 × 20 + 20 / 2 × 600 × .1 × 3/12 (20+1)

= 12000 + 600 × 3/12 × 21
= 12000 + 3150 = 15150
3
An= Rn- n / 2 × R × d (t1+ tn)  Present value

An= Rn- n / 2 × R × d (t1+ tn)

Present value of ordinary = 600 × 20 – 10 × 600 × .09 (3/12 + 60/12)

An= Rn- n / 2 × R × d (t1+ tn)  Present value

3
An= Rn- n / 2 × R × d (t1+ tn)
d= r/(1+rt)=.1/(1+.1×1)= 9%
Present value due = 600 × 20 – 10 × 600 × .09 (0 + 57/12)